Time to fix the equalization imbalance

While Newfoundland and Labrador is being told to make do with zero in equalization funding again this year, Quebec’s cut of the equalization pie will increase again this fiscal year to $11.7 billion.

Last year, Quebec received $11.1 billion in equalization. With that windfall, they brought in a budget with a $2.5 billion surplus, cut taxes and strengthened public services.

Quebec Hydro continues to generate massive revenue in the billions from the 1969 Upper Churchill contract which recently hit a 25-year automatic renewal clause which lowers what they are paying N.L. for hydro power, paying just a fifth of a cent per kilowatt hour and reselling that power for a bonanza on the market. This revenue is not included in the calculations for Quebec’s entitlement to equalization.

Over the past decade, Quebec has received $91.6 billion in equalization payments. No other province even comes close. Our province received zero.

“Quebec Hydro continues to generate massive revenue in the billions from the 1969 Upper Churchill contract which recently hit a 25-year automatic renewal clause which lowers what they are paying N.L. for hydro power, paying just a fifth of a cent per kilowatt hour and reselling that power for a bonanza on the market. This revenue is not included in the calculations for Quebec’s entitlement to equalization.

“Over the past decade, Quebec has received $91.6 billion in equalization payments. No other province even comes close. Our province received zero.”

When oil prices fell through the floor, as they did for Saskatchewan and Alberta, equalization should have been there to cushion the downturn.

That’s because the Constitution of the country guarantees it. Subsection 36(2) of the Constitution states: “Parliament and the government of Canada are committed to the principle of making equalization payments to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.”

That means we should not have to raise taxes through the roof to maintain service delivery at reasonable taxation levels. Equalization’s role is to kick in to bridge the gap for all of the equal partners of this federation we call Canada.

Has the current formula been modernized to reflect the demographic changes in Atlantic Canada and the delivery of services? Has it evolved to allow provinces to reap greater revenues from natural resources?

We are facing a third provincial budget under the Ball government. The first two, taxed us to negative rates of growth in our economy and most economic indicators are going in the wrong direction. We have great opportunities in our province for economic success but governments help create that climate. Being uncompetitive in taxation policy is not a good start.

Canada provides transfer programs to assist with the above but unfortunately we are not even heard in Ottawa as no one is speaking for us.

Quebec, on the other hand, is living on the spoils of all the fights of the past. In an October 2017 report, Ottawa’s Parliamentary Budget Officer (PBO) projected that, by 2091, Quebec’s share of Equalization will have grown from 60 per cent in 2017 to 75 per cent of the total pot.

The unfairness is blatantly obvious. Newfoundland and Labrador can make a great case, if we had those to make it.

In fact, western provinces were prepared to fight, but Dwight Ball refused to take up their offer to make it a joint national campaign for fairness.

Instead, he forced our people to pick up the slack for lost oil revenues by shouldering more than 300 tax and fee hikes — most of which will probably stay in place in Budget 2018.

Those tax hikes have crushed our economy, crushed families, businesses, communities and sent our people away.

There’s a real imbalance in this country, and someone ought to be raising their voice to point it out and get it fixed.

It won’t be easy to get equalization fixed,but it will be absolutely impossible to fix things if no one bothers to stand up to make the case for Newfoundland and Labrador.

On Premier Ball’s third budget and over two years as government it should soon be time to make the case for Newfoundlanders and Labradorians at the Ottawa table.

Keith Hutchings

PC MHA Ferryland Opposition Finance critic